Junk horizon appears active; MoneyGram eyed; O-I prices; Icahn rebounds; Mauser lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 12 – The domestic high-yield primary market had an active end to the week with another busy week on the horizon.

O-I Glass, Inc. priced an upsized $690 million tranche of eight-year notes (B2/B+) in a two-tranche, dual-currency offering.

Market chatter continued to circulate about a $400 million tranche of first-lien secured notes backing the buyout of MoneyGram International Inc., which is expected to appear in the week ahead.

A deal from Solenis/Diversey Holdings Ltd., a packaging company and companies in the energy sector are also expected to appear in the coming week, which is expected to have a rush of issuance.

Meanwhile, it was a quiet day in the secondary space with the market soft in intraday activity but lifted into the close to end the day relatively unchanged, a source said.

Exchange-traded funds were quiet on Friday. However, real money accounts continued to target select names in their buying and selling activity.

While the lack of progress in debt-ceiling negotiations continued to weigh on risk appetite as the June 1 deadline looms, markets were not considering a government default as a likely scenario, sources said.

New issues and topical news remained the driver of trading activity during a quiet session.

Icahn Enterprises LP’s senior notes (Ba3/BB) continued to trade in heavy volume with buyers stepping in to lift the notes after heavy selling over the past two weeks.

Mauser Packaging Solutions Holding Co.’s 7 7/8% senior secured first-lien notes due 2026 (B2/B) sank in heavy volume as the market anticipates a new offering from a packaging company.

Iron Mountain Inc.’s recently priced 7% senior notes due 2029 (Ba3/BB-) remained active although with little movement in price as the notes leveled off with a nominal premium.

O-I prices

In an active Friday session O-I Glass subsidiary Owens-Brockway Glass Container Inc. (OBGC) priced an upsized $690 million tranche of eight-year notes (B2/B+) at par to yield 7¼%.

The tranche downsized from $700 million after upsizing from $500 million.

The yield printed at the tight end of price talk in the 7 3/8% area. Initial guidance was in the mid-to-high 7% area.

The dollar tranche ended up playing to over $2 billion of demand, sources said.

The bonds were going out at par 3/8 bid, par 5/8 offered, a trader said.

Also on Friday, OI European Group BV (OIEG) priced an upsized €600 million tranche of five-year notes (Ba3/BB-) at par to yield 6¼%.

As with Iron Mountain, which priced a $1 billion issue of 7% senior notes due Feb. 15, 2029 (Ba3/BB-) earlier in the week, O-I glass is a high-quality name known and liked by the market, a portfolio manager remarked on Friday afternoon.

Active issuance projected

Look for robust issuance in the week ahead, sources said on Friday.

A $400 million tranche of first-lien secured notes backing the buyout of MoneyGram by Madison Dearborn Partners is expected to appear.

The deal, to be led by Goldman Sachs & Co. LLC, has been discussed in a yield context in the 10½% area.

Also, Solenis/Diversey Holdings, a familiar name on the high-yield bondscape, is expected to appear during the May 15 week, a trader said.

Also watch for deals from a packaging company, an energy company, and others, in what is expected to be a busy week in the new issue market, sources said on Friday.

These companies are coming now because they are not certain how much they might have to pay in six-to-nine months, or even if the market will be open, the investor said.

So, they’re accessing the market now in order to provide themselves a little breathing room.

Icahn bounces

Icahn Enterprises’ senior notes were bouncing off their lows on Friday after heavy selling in the previous two sessions.

The 6 3/8% senior notes due 2025 gained 2½ points to close the day at 90¼, a source said.

The yield was about 10¾%.

There was $26 million in reported volume.

The 4 3/8% senior notes due 2029 gained almost 3 points to close the day at 77 with the yield now 9¾%.

There was $14 million in reported volume.

Icahn’s 5¼% senior notes due 2027 gained 2 points to close the day at 83 7/8 with the yield 10¼%.

There was $22 million in reported volume.

The 6¼% senior notes due 2026 jumped 2 points to close the day at 88¾.

There was $20 million in reported volume.

The notes strongly rebounded on Friday after short-seller Hindenburg Research announced it was taking a short position in the notes.

The notes have had heavy selling the previous two sessions after Icahn Enterprises disclosed a federal probe in response to Hindenburg Research’s report on the company, which was released in early May.

While there were buyers for the notes on Friday, they have fallen about 10 points since Hindenburg accused the company of overleveraging itself and inflating the value of its assets.

Mauser lower

Mauser Packaging’s 7 7/8% senior secured first-lien notes due 2026 were lower in heavy volume on Friday as market chatter circulated about a packaging company tapping the market in the coming week.

The 7 7/8% notes fell 1 point to give back all gains made in April and early May.

The notes traded as low as 99 7/8 during the session but closed the day in the par 1/8 to par 3/8 context, a source said.

There was $21 million in reported volume.

Mauser priced a $2.75 billion issue of the 7 7/8% notes at par in late January in a deal that was more than 4x oversubscribed.

Iron Mountain active

Iron Mountain’s recently priced 7% senior notes due 2029 remained active on Friday although with little movement in price.

The 7% notes continued to trade in the par 1/8 to par 3/8 context, a level reached the previous session after a weak break.

There was $18 million in reported volume.

Fund flows

The dedicated high-yield bond funds had $381 million of net daily cash inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $345 million of inflows on the day.

Actively managed high-yield funds had $36 million of inflows on the day.

Indexes

The KDP High Yield Daily index fell 7 points to close Friday at 50.61 with the yield 7.31%.

The index was down 4 points on Thursday, added 12 points on Wednesday after falling 9 points on Tuesday and 10 points on Monday.

The index added 18 points on the week.

The CDX High Yield 30 index inched up 1 basis point to close Friday at 100.13.

The index fell 22 bps on Thursday, gained 36 bps on Wednesday and fell 23 bps on Tuesday and 9 bps on Monday.

The index gained 17 bps on the week.

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